WARNER SPRINGS RANCH SOLD FOR $11.75 MILLION

Hotel development company may spend $50M on upgrade

The historic Warner Springs Ranch resort has emerged from bankruptcy and been sold at auction to a San Diego hotel management and development company for $11.75 million.

Escrow is expected to close April 30.

Pacific Hospitality Group plans to invest up to $50 million in renovations and redevelopment of the facilities, which have been shuttered since early last year, said Pacific’s president, Fred Grand.

The sale means the Pala Band of Mission Indians will not buy the ranch as the tribe has hoped for years. A bankruptcy judge rejected its bid of $13.4 million earlier this month in favor of Pacific Hospitality’s offer.

“The tribe is very disappointed that the judge elected to select another offer and to disregard the ancestral connection that the tribe has to Warner Springs,” said Pala spokesman Doug Elmets. “The tribe is hopeful that one day it will be able to own the ranch, which is their historical land, and be able to operate it as a first-class resort.”

The area was the tribe’s ancestral home before the Indians were forced out at gunpoint in 1903 to a reservation off what is now state Route 76. It now operates a successful casino and resort there, 38 miles from Warner Springs.

Since Warner Springs Ranch was closed in January 2012, more than 1,000 “ranch owners” — people who bought memberships in the community — have been in limbo.

According to Pacific Hospitality, the resort will continue to offer memberships, including “legacy memberships,” at 50 percent of the standard price to those who were original owners.

The property, founded as a working ranch in the mid-1800s and opened as a resort in the 1920s, encompasses nearly 2,400 acres.

The rural, forested land offers mountain views, natural hot springs, and a temperate climate. The resort includes a 27,000-square-foot main lodge, 250 casita units, a 144-acre golf course and clubhouse, four tennis courts, equestrian facilities, two restaurants, a spa, campgrounds, three swimming pools, a private airport and meeting rooms, almost all of which have fallen into various states of disrepair.

Grand said extensive renovations will be completed in phases, the first phase being a renovated golf course expected to be completed in spring 2014. Because many of the buildings at the ranch are old and in need of upgrades, Grand said the entire resort won’t open for at least two years, with the golf course, equestrian facilities and hot springs opening earlier.

Chapter 11 bankruptcy was filed by the ranch homeowners association last year due to ongoing litigation between ranch owners. Although the Pala Indians were in escrow on the property for two years, litigation and bickering among owners kept the sale from going through.

Grand said he has reached out to the Pala Indians, telling them that Pacific Hospitality is sensitive to cultural issues. Legend has it the Indians placed a curse on the land when they were forced off in 1903.

David Gee, the president of the homeowners association and a proponent of a sale to Pala, was ousted in July 2012 from his position and has since sold his membership to a debt acquisition company, as have about 100 other owners. He said he has doubts that Pacific Hospitality will be able to come up with the money to do the renovations necessary to make the ranch a thriving business.

“It’s without a doubt in my 35 years of practicing law, the most bizarre ownership relationship and challenging dissolution of that relationship that I have ever seen,” Gee said.

Grand said the company wouldn’t have invested close to $18 million in the acquisition “if we didn’t have a very high degree of confidence that we can make it successful. We’re not relying on memberships. We’re relying on creating a product that will be attractive to the general public and to visitors from around the world.”